First Round Capital recently announced that it is setting up an exchange fund that allows its portfolio company entrepreneurs to take some of their equity and exchange it for an interest in a pool that consists of equity interests in First Round’s portfolio companies generally. In other words, rather than having all of your eggs in one basket, you can take a small portion of your stock and get some diversification by getting an interest in a fund that presumably will somewhat track First Round’s overall performance. What a simple but great idea! It looks like First Round takes no interest in the fund. They just provide it as a service to their entrepreneurs. In addition to diversification of risk, it gives all those CEOs an incentive to help each other and to allow peer pressure to go to work since no founder wants to feel like he is letting down the others or isn’t keeping up. Kudos to Josh and the team at First Round!